We’ve all been down this road before. Of course, the same people who talk the talk don’t walk the walk. They’ve been the ones who caused the current fiscal problems the Premier was talking about.

In this corner, your humble e-scribbler has been warning about the Tory fiscal imprudence since 2006. It’s one they’ve acknowledged being vaguely aware of since about 2008, at least. That’s when the Auditor General of the day warned about it. In 2009, the finance minister and the Premier of the day admitted their spending was unsustainable.

And yet they continued to crank up spending to record levels.

So basically there is nothing in Kathy Dunderdale’s speech on Tuesday that the Tories haven’t said before. Kathy Dunderdale’s strategy to deal with the problems she and her colleagues created is the same one the Tories have talked about since 2003. And that’s the one that created the problem she claims she wants to fix.

Think of it like make-work for politicians. First, you create a problem. Second, announce that you plan to tackle the problem. Third, tell everyone the strategy you will use is to follow all the policies that caused the problem in the first place. Repeat annually as needed.

Anyway, just look at one part of the speech if you want to know how seriously out of touch with reality a politician can be:

What is the best fiscal policy response in the face of this reality? Some may suggest that a balanced budget is the best goal in order to avoid taking on debt. However, this would require a dramatic reduction of spending.

If they can’t balance the budget without a dramatic reduction in spending then they are already spending way more than they are bringing in.

D’uh!

So if you are spending beyond your means – and don’t stop - you cannot really get spending under control, reduce public debt and all the others things that genuinely responsible governments do.

And if you reject balanced budgets because it would mean spending cuts, then obviously you just aren’t serious about all that talk of spending cuts, controls or that thing called fiscal prudence.

After eight years, the unions know all about the born again fiscal virgins. They aren’t fooling anyone.

Premier Kathy Dunderdale spent some time Monday afternoon chatting with On the Go’s Ted Blades about a recent decision by Kiewit to take a pass bidding on a second topsides module for the Hebron project.

Labour was tight. The company was having trouble delivering on time and on budget.

At one point, the Premier said there would be more work. The size of the topsides has apparently gone from the original estimate of 11,000 tons to 18,000 tons.

So, sez the Premier, there’ll be 18,000 tons of work.

You know, that’s something that always puzzled humble e-scribblers. When people say there’s tons of work, now you know what they mean. Don’t look for the number of people on the job. Forget the number of hours of labour.

Work now is measured in tons.

You cannot make this stuff up.

You wouldn’t.

You’d be afraid to make something like that up because people would never believe that the Premier of the province could say such a thing.

But she did.

Dunderdale also tried to claim that the crowd what has been running the place since 2003 were the first ones to copper-fasten the amount of work to be done locally on an offshore project. Others, she said, had settled for “best efforts.”

Kathy didn’t say copper-fasten but that’s one of her favourite little bits of meaningless jargon. Like referring to something as a piece. Like the Hebron piece. Or the Kiewit piece.

But anyway, first time for nailing stuff down right to the gram or work that had to be done in the province.

All that would be wonderful, of course.

Splendiferous even, except that it isn’t true.

Construction of the gravity base for the project was always going to be done in Newfoundland. That’s the cheapest way to do things. The provincial government didn’t get anything there they didn’t already have going into the meeting.

And then there is a bunch of small time stuff like a tube called the flare boom. Low tech metal bashing, for sure, and again, nothing of any difficulty to get done in someone’s back yard welding shop.

But the topsides modules, utilities and process module and other big stuff covered in Sections 5.5 B, C,and D of the benefits agreement, well those are all subject to conditions. The conditions are secret. They are considered to be commercially sensitive.

As for the rest of the project, the Hebron final agreement has more than a few give-aways in it.
The companies got a huge break on financing research and development. Kathy and her former boss let the companies skate with a pittance of a cash commitment compared to what the offshore regulatory board rules required.

On royalties, Kathy and her old boss gave the companies a break up front as well. Instead of an escalating percentage of revenue, Kathy and Danny gifted the companies with a flat one percent for as long as it takes to pay off the project development costs.

When Roger Grimes talked about such an idea, back when oil prices were forecast to stay low forever, Danny tore great strips off Grimes’ hide. As it turned out Danny gave the oil companies a gigantic break when prices were high. And Kathy Dunderdale totted out in front of the cameras to tell news media it was a way of giving the oil companies some protection against changes in oil prices.

Just think about that, in hindsight. Back then - in 2008 - Kathy was running to protect oil companies against the chance oil prices might drop.

The poor old multinational multi-trillionaire oil companies.

Too fragile to take the risk.

A couple of years later – in 2010 – oil prices were going to be high forever. That is the justification for Muskrat Falls. And what about protecting taxpayers from the possibility oil prices might fall? Out trots Kathy and then Shawn and now Jerome to say there’s no chance of that happening.

And so the taxpayers of Newfoundland and Labrador, the people who own the oil and gas and the water, having given the oil companies a break must now dig ever deeper into their own pockets to ensure their electricity prices are high. Nova Scotians, meanwhile, will get their power for free, except for three months of the year when Muskrat apparently can’t deliver the juice.

Not much of a local benefit in that. Sure, Tory supporters will tell you all about what Danny got in exchange. Like equity stakes.

Hang on a second.

Equity.

No small irony that the two big issues in the province are the Lower Churchill on the one hand and Hebron on the other. Those equity stakes, including the one in Hebron, were always about one thing: financing the Lower Churchill. Local benefits were entirely secondary.

Don’t believe it?

Williams broke off Hebron talks in 2006 because he couldn’t get an equity stake. Nothing else. After 18 months of public pissing matches and private suck jobs, Williams got a deal on Hebron.

But he didn’t pick up any local benefits that weren’t already on the table in 2006. The so-called super-
royalty won’t add much beyond what the province would have received under the same royalty regime that is delivering in spades on projects like Hibernia and Terra Nova and White Rose.

The Premier also discussed the province's Energy Plan objective of using non-renewable resource revenues to fuel a future based on renewable sources of energy.

At times like this, it is always interesting to go back and see what was running around at the time. This time look at August 2007 and the rather convenient election announcement of a Hebron deal:

6. Shortage of workers means shortage of work.

In the last round of negotiations, the provincial government insisted that any work that could be done in Newfoundland and Labrador had to be done there or the companies would pay a penalty. Reportedly, the companies noted that Long Harbour plus the Lower Churchill would outstrip the local labour and engineering pool making it almost impossible to complete Hebron using only local resources.

Cancellation of Hebron last year meant that workers who would have started work on Hebron have already headed west to the higher wages of Alberta. That made the predicted situation worse, not better and therefore will make it harder for the province to stick with that bargaining point.

Expect that provincial demand to drop off the table or for Hebron to get preference over the Lower Churchill. Otherwise, the cost of the project will be forced up.

Your humble e-scribbler had plenty of people from the local oil and gas community point that out. The companies talked about labour force shortages and costs, they said. The final Hebron agreement reflected the limited capacity in the local market to do some of the bigger components for Hebron. The only things the companies had to do here was what they absolutely had no choice but do here.

Not surprisingly, that old demand for guaranteed local benefits or suffer a penalty disappeared.

And equally unsurprisingly, the provincial government’s news release talked up the GBS and the small stuff – “outstanding local benefits” – but only after they played up the equity.

Makes you wonder why Kathy Dunderdale is talking about Kiewit and Marystown like it was some kind of surprise to her. She’s known about the whole thing from the beginning: Hebron, the Lower Churchill, jobs, local benefits and the equity.

30 January 2012

In the most recent seating plan for the House of Commons, Cleary’s seat goes all the way down the opposition side of the House down to the seats right next to the Tories, up in the back row.

The orange arrow shows how far he’s been shuffled.

There are a handful of Conservatives on the opposition side because there aren’t enough seats for all the Tories over on the side normally reserved for government members.

Ryan’s new digs are in the same desk pairing as an independent member of the House.

If you want to get a sense of direction, the Speaker would be towards the bottom of this seating plan. The government benches are to the right. The only thing between Ryan’s new seat and the hall outside the House is not much more than a curtain.

No surprise in that, given that Adams’ did some calculations of water flows and came to the conclusion that for at least part of the year, Muskrat Falls wouldn’t be able to meet its commitments to ship electricity to Nova Scotia.

But Adams hit such a nerve that Nalcor boss Ed Martin posted a comment on his own corporate blog that purports to correct Adams’ inaccurate comments.

Martin doesn’t really provide anything concrete. He just points to the mass of stuff filed with the public utilities board. Some of it comes from the best minds available, donchyaknow. Lots of well worn lines but nothing that specifically refutes anything Adams said.

And then Martin points to the water management agreement imposed by the public utilities board on Nalcor and Churchill Falls (Labrador) Corporation in 2009:

I’m not sure if you are aware of legislation in our province that requires a water management agreement to be in place between Nalcor and Churchill Falls (Labrador) Corporation (Churchill Falls). The legislation requires the two power producers to use available storage, primarily in the Churchill Falls reservoir, and their respective generating facilities to optimize the production of power while maintaining the contractual obligations of Churchill Falls to its customers.

The first sentence is a bit condescending but look at the last bit: “optimize the production” while maintaining the contractual obligations of Churchill Falls to its customers.”

Priority for Churchill Falls

Not exactly.

Clauses 3.1 and 3.2 of the water management agreement give Churchill Falls customers more than an equal status with Muskrat Falls.

While we can’t be sure Martin is aware of the actual words in the water management agreement and their implications, here they are for greater certainty:

3.1 No Adverse Effect

The parties acknowledge that pursuant to Section 5.7 of the Act, nothing in this Agreement shall adversely affect a provision of a contract for the supply of Power and Energy entered into by a Supplier and a third party prior to this Agreement, or a renewal of that contract (collectively "Prior Power Contracts"), and that all provisions of this Agreement and ancillary documents and agreements shall be interpreted accordingly.

3.2 Acknowledgement of Prior Power Contracts

The Suppliers acknowledge that the following are the sole contracts for the supply of Power and Energy entered into by a Supplier and a third party prior to this Agreement:

(a) the power contract entered into between Hydro-Quebec and CF(L)Co dated May 12, 1969 as well as Schedule III of such power contract which relates to its renewal (the "HQ Power Contract" );

(b) the Churchill Falls Guaranteed Winter Availability Contract between Hydro-Quebec and CF(L)Co dated November 1, 1998, as amended on March 29, 2000;

(c) the sublease entered into between Twin Falls Power Corporation Limited and CF(L)Co dated November 15, 1961, as amended on April 15, 1963, November 30, 1967 and July 1, 1974 and renewed pursuant to an agreement dated June 9, 1989,and the operating lease between the same parties dated November 30, 1967, as amended on July 1, 1974 and November 10, 1981; and,

(d) the power contract entered into between Newfoundland and Labrador Hydro-Electric Corporation and CF(L)Co dated March 9, 1998, as amended on April 1, 2009.

Note the reference to section 5.7 of the Electrical Power Control Act, 1994. That was part of a package of amendments to the EPCA then-natural resources minister Kathy Dunderdale rammed through the House of Assembly on the second last and last day of the spring 2007 session.

Provision of an agreement void

5.7 A provision of an agreement referred to in section 5.4 or 5.5 shall not adversely affect a provision of a contract for the supply of power entered into by a person bound by the agreement and a third party that was entered into before the agreement under section 5.4 or 5.5 was entered into or established, or a renewal of that contract.

During the very brief discussion in the House – it wasn’t a debate by any means - Dunderdale mentioned this clause specifically:

The amendment will ensure the delivery commitments under existing contracts are honoured, including the 1969 power contract for the Upper Churchill. This protection is explicitly written into the amendment.

When you look at the details, it’s pretty clear that the water management agreement gives priority to any demands related to Churchill Falls. As long as there’s enough water and there is no conflict, everything on the river will be fine.

But what happens when the water flows needed at Muskrat Falls don’t match with the needs of Churchill Falls? Well, Muskrat loses every time.

This is something that the current administration voted for in 2007. It’s included in the 2009 water management agreement.

No dispute on Nova Scotia?

With that firmly in your brain, go back and read Ed Martin’s blog post again.

Notice what’s missing.

At no point does Martin mention the problem of delivering electricity to Nova Scotia in the peak winter demand months of January to March. Churchill Falls will be cranking water down stream to run Muskrat Falls so water management is not an issue.

The problem Tom Adams identified is that Muskrat Falls likely won’t crank out enough electricity to feed the entire island in place of Holyrood and ship electricity to Nova Scotia at the same time.

This one seems tailor-made for the legal geniuses who came up with the ;aw in this province that allows you to vote in an election that doesn’t exist to fill a vacancy the legislature that doesn’t exist either at the time you vote.

You have to read the story to discover that the real point of the suit was to try and get cash from the state. The inmate contended the state would have to pay for the violation since the inmate - being an inmate - was a ward of the state.

Energy analyst Tom Adams has an interesting observation on why Nalcor and Emera are having a hard time finishing their agreement.

Adams believes that a detailed analysis of Muskrat Falls generating capacity and electricity demand will create a situation where “Nova Scotia gets nothing or close to nothing when customers there need it most.” [Emphasis in original]

As Adams lays it out:

During the times of the year when Holyrood would have been running near capacity, all on-island generation [in Newfoundland] will be running flat-out (as it does today) and Muskrat Falls will not be able to supply enough power to move any significant amount of power to Nova Scotia. This is because in Jan./Feb./Mar. the maximum output of Muskrat Falls will be about 500 MW due to the seasonality of water flow. This maximum output is after taking into account the operation of the Upper Churchill facility upstream which is contractually bound to maximize winter production for sales to Quebec.

Hang on, some of you will be saying. Adams has left out 324 megawatts. He mentions 500 MW but the Muskrat Falls dam is supposed to produce 824 MW.

Yeah, well, not really according to Adams.

Adams took a closer look at information Nalcor supplied to the public utilities board. Adams believes that the Nalcor information presents an ideal scenario. In actual operation, Adams believes the plant will crank out 577 MW. According to Adams, “this corresponds to 5.05 TWh of production — i.e. pretty close to the [official] project estimate of 4.9 TWh of production.”

In the summer months, Nalcor won’t have any trouble meeting its commitments to ship free electricity to Nova Scotia. There’s plenty readily available on the island from the surplus generating capacity in central Newfoundland.

Want to know how far off cost estimates can be for a project like Muskrat Falls?

Look no further than Manitoba where the same people who reviewing Muskrat falls for the public utilities board are in spot of bother over plans and costs and what consumers will wind up getting nailed for:

Keeyask is a 600-megawatt generating station and Conawapa is 1,360 megawatts. In comparison, the 1,340-megawatt Limestone generating station was completed in 1990 at a cost of $1.43 billion. Conawapa's cost is 5.5 times higher.

The cost of the nearly complete Wuskwatim generating station has risen from the 2004 estimate of $900 million to $1.6 billion, an astonishing 78 per cent, and shows the higher cost estimates for the proposed projects are valid.

American demand is down.

Natural gas prices are in free-fall according to the article linked above, and as such, the price for electricity from natural gas is dropping along with it.

Anyone who thinks Muskrat Falls is somehow immune from all those considerations is just being naive.

But rest assured we are covered. Nalcor has a 15% cost over-run built into its cost estimate of $5.0 billion for the Muskrat Falls dam and power line to St. Jawns.

On Saturday, The Telegram’sRussell Wangersky showed the benefit of paying attention to the fine print if you want to understand how far off Nalcor and Wade Locke are when they try and conjure up a price per kilowatt hour for Muskrat Falls electricity.

You don’t have to check fine print to understand how poorly Nalcor and the provincial government thinking has been on Muskrat Falls. All you have to do is look at the front end of the clip that NTV used last week of Ed Martin at the news conference announcing that Nalcor and Emera were going to miss their second deadline to finish a deal on the project.

Here’s what Martin said:

"Yesterday, for instance, we were talking about a particular topic, some new points came up which are very helpful to make sure we think through prior to conclusion, and it's no time to make a snap decision at that point."

New points.

Not old ones.

Not changed ones.

New ones.

Completely new.

Never though of before.

Yesterday.

Seven years after Nalcor started planning the most recent version of the Lower Churchill

14 months after Nalcor signed a fairly detailed set of terms that would form the basis of the agreement with Emera.

Someone brings up some “new points” that no one had thought of before.

29 January 2012

Over at the Ceeb, John Furlong does his usual superb job of cutting through the bullshit. This week it’s dissecting the noise this week over what Ryan Cleary said, or what people claim he said and such.

Over at the Telegram, Pam Frampton goes at the same subject with similar observations.

Different style.

Same subject.

Both worth every second of your time.

When you are done with those two gems, compare that with Ryan Cleary’s observations on his own experience rendered by Geoff Meeker in his Telegram blog.

Ryan talks a good tale about what good journalists do and about bravery, the connection between what scares him and what he used to write about and about the relationship between reality and where he is. Where the first two columns are about Cleary’s comments and reaction to them, Meeker writes about Cleary’s favourite subject: himself.

The one thread you won’t see in Cleary’s usual pile of self-serving and entirely risible twaddle is the simple fact: as soon as the first tweet of criticism hit, Ryan Cleary ran from his own comments as fast as someone’s fingers could type the release. He wrapped himself in the sealskin flag.

He turned his back on the brave position he took and instead held aloft the banner of self-praise for his new role as champion of “conversation”, debate and that other spin-word “dialogue”.

Cleary told Meeker that being in Ottawa, one is on the moon. His riding is Earth, presumably the place of reality and presumably where Cleary loves to be.

How odd then, that as soon as he appeared in the real world – the one of his comments on the seal hunt – Cleary could not strap on his rocket pack fast enough and head home.

Read all that this weekend. Afterward, if you are not better clued into the world as it is, there’s something seriously wrong.

28 January 2012

And, most importantly, you can understand it without being a math whiz.

What you see are the holes in Nalcor’s submission to the public utilities board. You can also see information that was readily available to Wade Locke. He ignored it for some reason.

As a result, Locke’s lengthy presentation turns out to be even weaker than it first appeared. Your humble e-scribbler didn’t even come close to describing the inadequacies of Locke’s recent assessment.

What you will also see are the fundamental concerns so many people in the province have about Muskrat Falls and the rush to build it. The cost of the project is enormous, the rationales are flimsy and the people who will inevitably pay for it are the taxpayers of this province.

Alone.

Jerome Kennedy tweeted a bit this week. One of his claims was about the rate for the average consumer would pay. Kennedy’s numbers – taken from Nalcor – just don’t add up. Wangersky’s column makes that pretty clear as well.

Read what Russell says.

Read all of it.

And then look again at all the news about Muskrat Falls this week.

If your blood isn’t running cold in your veins at that point, you must have the electric blanket turned up on bust.

The basic problem in the fishery is that the provincial fisheries minister has too much control over the industry and - inevitably - tends to use it all for political purposes rather than for the good of the industry.

Oh yes, and you can’t slide a sheet of paper between the parties on their fisheries policy. King’s latest idea is straight out of the same worn-out playbook the provincial Liberals pushed in the last election. And it’s the same as the bullshit the NDP is pushing with their claim that the problem is corporate greed.

We have made significant progress on the agreements and we are nearing completion; however, we will not have all the detailed work completed by January 31 as previously stated.

We do have the majority of agreements completed. This consists of thousands of pages of contract details. Our next steps are to finalize all the detail in the agreements and complete our internal reviews and due diligence.

Both parties are committed to a quality outcome and we want to ensure clarity in these agreements.

Chris Huskilson:

The principles of the term sheet are still the foundation of all discussions and they have not changed.

We understand that there will be some people who will believe this is more significant than it is and we feel compelled to emphasize that our relationship is strong, the term sheet principles remain and they are guiding our work.

We continue to make progress and we will ensure that people are informed once we have finalized the agreements.

This is the second deadline the companies missed. Last November they slide the deadline from the end of that month until the end of January.

“We are making good progress on the agreements,” said Ed Martin, President and CEO of Nalcor Energy. “However, we need more time to complete the volume of work required. Our relationship with Emera remains strong and both parties are committed to a quality outcome. These are important agreements and we’ll take the time to do them right."

Nalcor and Emera are targeting year‐end for completion of key agreements and both parties will then conduct review and due diligence prior to the end of January.’'

"We remain committed to the principles of the Term Sheet and look forward to finalizing an agreement with our partner Nalcor this year,” said Chris Huskilson, President and CEO of Emera Inc. “This is an agreement that will be mutually beneficial for our customers in the region for decades to come. The additional time we are taking is modest in the grand scheme of things.”

Note the similar words.

But note the differences:

This time there is no new deadline even though they have completed “the majority” of the agreements. Last fall they said they would finish the agreements within a month and then allow another month for “due diligence”.

This time they actually came to St. John’s to make a big deal about the missed deadline. That made sure people would wonder about the high level of sensitivity the companies had to the possibility that some people might get the wrong idea.

Whoever those unnamed people are, they have enough influence to frighten the shit out of the two companies. You can tell because Huskilson actually mentioned their concern in his bit of the statement: "We understand that there will be some people who will believe this is more significant than it is …”

As it is, the big show in St. John’s telegraphed that maybe the deal isn’t so secure after all. Think of it like trotting out the deathly ill despot so people won’t speculate that he is about to kick off. They usually only do that right before he snuffs it, thereby confirming the rumours were right all along.

And if you really want to know how not to reassure people, try this line from Nova Scotia Premier Darrell Dexter in Friday’s Chronicle Herald:

"They're now not even going to bother to set another deadline because they feel they're close to getting it completed, which I think is all a very good thing. It's all very good news, in fact."

Premier Kathy Dunderdale and her ministers refuse to hand over documents on more than $5.0 billion in public works spending by the Conservatives since 2004.

The documents are cabinet secrets, as their argument goes, and under the access to information law cabinet cannot release that information to him.

like her predecessor, Premier Dunderdale was unavailable to talk to reporters earlier on Thursday but she did have time to call an open line radio show to talk about the Auditor General and other things. Dunderdale eventually turned up at a 2:00 PM scrum to take reporters questions. Predictably she rejected any claims that she is withholding information improperly.

Every piece of information that comes in to government is available to the auditor general. It's just the preparation of material used specifically for the preparation of cabinet documents is not available.

Elsewhere in the scrum Dunderdale explained that the Auditor General had others ways to get the information he needed. When asked to explain that by reporters, she couldn’t. Dunderdale also admitted that there was actually no infrastructure strategy. Instead there were documents prepared for cabinet that gave a complete overview of the government’s capital works spending.

But anyway, by her own account, therefore, that’s the sort of thing that the Auditor General wouldn’t be allowed to see. The AG wanted to look at a strategy and assess the performance. By Dunderdale’s account there’d be no way he could see what was included in the non-existent strategy and what wasn’t.

Sounds foolish.

And it is foolish.

It’s also familiar.

In 2006, Danny Williams and his cabinet (including Kathy Dunderdale) took exactly the same position when another Auditor General asked for documents on the fibre optic project.

Now in that instance the government - through a resolution in the House of Assembly – asked the AG to “investigate all the details and circumstances” of the controversial deal. That’s really no different than the AG doing the job he got from a law passed by the House of Assembly (the Auditor General Act).

Same situation.

Same effort to hide information.

And ultimately, cabinet’s excuses are still just as flimsy.

Your humble e-scribbler pointed out in 2006 that cabinet can use its own discretion and release any documents it likes. They did it in 2004 and, eventually, Williams and cabinet relented with the fibre optic review and gave the AG what he needed.

Now it took four months, mind you, for them to do the right thing. But after lots of public pressure, Williams and his cabinet reversed their stand. In effect, Williams and his cabinet (including Kathy Dunderdale) admitted the argument they’d used the year before was utter bullshit.

Just to be sure, folks, what we are talking about here is just provincial capital works spending dolled up as something much grander than it ever was. They called it “infrastructure” but essentially it was – and is – the sort of road building, road paving, schools building and all the other capital works that government shave done for decades.

And Auditors General before the current one have had no problem looking at the documents, totalling up the amounts, checking the way things were done and then reporting what they’ve found.

Until now.

For some reason Kathy Dunderdale and her cabinet want to keep a giant chunk of public works spending over the past eight years away from the Auditor General and his Excel spreadsheet.

The question is why.

Maybe it has something to do with what the AG did get to look at. The Labrador Highway and public publics repairs chapters don’t make for pretty reading.

Maybe it has something to do with just how much political consideration goes into public works decisions like road paving.

Maybe it has something to do with what SRBP already noted about capital works under the Tories. So much of the “stimulus” and the infrastructure program was nothing more than regular public works spending announced and re-announced and announced over again. Through it all, though, it appears that massive cost over-runs and inexplicable delays measured in years are routine for government public works projects.

Some of the most embarrassing of the administrative messes cost the provincial government a cabinet minister in 2009. Remember the Lewisporte and Fleur de Lys health care centres and Paul Oram? That was about capital works decision-making within one of the departments that refused to turn over documents to the Auditor General.

Whatever the reason, one thing is clear: early on in his tenure, while Danny Williams could keep up the old cabinet documents ploy for six months, six years later, the public won’t put up with that sort of political tomfoolery any more from any one.

26 January 2012

The veteran auditor, in an interview Thursday, said the government's sweeping denial of documents on the basis of cabinet confidentiality has left him no way to trace how and why spending decisions were made.

"I can certainly say it's not a good thing," he said.

"The auditor general's office is a very important link in the chain of accountability in government. And when governments spend money and make decisions, we go in and look at how they spend the money and how they make these decisions."

Loveys, who plans to retire in May after a 33-year auditing career, said he has never seen such an information block.

"I've seen some refusals, but the very broad interpretation is something I've never seen before. It's inconsistent with reviews we've done in the past."

In a meeting of the committee that manages the business affairs for the House of Assembly, the Tories approved an additional $150,000 for the Liberals. The New Democrats got nothing, even though they have a significantly larger caucus.

The Tories used a 2008 report to justify the extra Liberal cash. Back then, they denied the Liberals the cash recommended by an independent review and, instead, rewarded the New Democrats.

You can take all the political chatter about this little episode but don’t spend too much time on it. Instead focus on what this little play by the Tories says about their opinion of which party poses the bigger political threat to the Tories.

Hint: it ain’t the Liberals.

And frankly, that’s a pretty sensible call at this point.

Since last October, the provincial Liberals haven’t done anything to suggest they are sharper than they used to be, more focused or anything else positive. In fact, if anything, the Liberals have actually slid backwards. A series of internal problems garnered the caucus some embarrassing headlines. Their media work – such as it is – remains clunky and amateurish. There’s no sign they are doing anything to develop an A Game, let alone bring it. More money isn’t likely to make any difference to them.

On the other hand, more money would have let the New Democrats hire staff to reinforce the ones they’ve got. The Dippers have been hitting the Tories hard lately; well, a lot harder than the Liberals. If they’ve been able to do damage with few resources you don’t need much of an imagination to figure out what they could do with more.

The culture of secrecy that is Danny Williams’ legacy in provincial politics is firmly institutionalised. The provincial Conservative’s war against oversight and adequate oversight of their management of the province’s finances now extends to withholding information from the province’s Auditor General.

When the province’s Auditor General went looking for the Conservative’s oft-mentioned infrastructure strategy, he found out they didn’t have one. You’ll find that gem in the first few pages of the latest report from the Auditor General on how the provincial government spends public money.

A committee of officials was supposed to develop the strategy. While they didn’t do that, according to the AG, the group did produce a draft “report”. But the draft report was never finalized.

When the auditor general’s officials started contacting departments to get information on capital works spending, they ran smack into a legal roadblock. The departments refused to release the information to the Auditor General and cited the provincial Access to Information Act as justification. The documents would reveal cabinet deliberations according to justice department lawyers, and as such they couldn’t turn them over to the Auditor general.

The access to information laws were never intended to cover officials like the Auditor General. You can tell that because of the way the law is worded. The purpose of the Act is to make public bodies more accountable to the public by providing the rules under which the public may obtain information held by government and its agencies.

Members of the public – known as applicants in the Act – apply as set out in Section 8. Under section 18, heads of department must refuse to disclose cabinet documents to applicants.

But the Auditor General? Not a person as defined by the Act or an ordinary member of the public.

The AG’s got his own legal opinions and they pretty much wind up in the same place: there’s no legal reason for the provincial government to hide information from the AG. Unfortunately, he and his lawyers have taken the weak premise of accepting that the access law actually governs the AG in the first place.

And all the AG has done is filed a report with the Tory-dominated House of Assembly. That might make the upcoming session interesting and tense but it doesn’t settle the legal issues. The AG needs to take it downtown and drag the attorney general in front of a judge.

Now this is not the first time the provincial government has misused the access laws to keep information from the public or other officials. In fact, the current administration is notorious for its efforts to hide information from the public. Around these parts, SRBP likes to call it freedom from information.

In fact, in the seven years SRBP has been around, this sort of stuff is part for the course.

No mention of Kiewit in her tweets or anywhere else but a day or so later Kennedy suddenly started tweeting about Muskrat Falls and all the great benefits to come from that project. Kennedy even mentioned the old chestnut about how many jobs the project would create.

Brave thing to do in these parts where politicians seldom do genuinely brave things like have opinions of their own and voice them. Normally what you get is lots of pledges to be a strong voice for this cove or that tickle. They all claim they’ll speak loudly about this, that or the other.

Fight?

Sure if you listen to the crowd of local crackies either seeking office or safely on the public tit, they’ll fight any time, any place against anyone over any thing.

Have no doubt about just how untamed and untameable these ponies are, either.

They’ll be the first to tell you, even if all that they really do is stuff a bit of straw in the belt of their pants and clop a pair of cocoanut halves together for a good show.

So after Cleary spoke frankly on a touchy subject, two things happened.

For one, Cleary’s political opponents and a whole lot more besides scrambled to shit on him everywhere and anywhere they could. News releases from Connies in Ottawa, John Efford on the Open Line, Siobhan Coady on da facebook all tearing big strips off Cleary. A hundred jobs to be lost in Corner Brook was nothing in the news coverage compared to Cleary’s words, accurately reported by the local media..

For two, Cleary issued a news release in which he disowned his frank and brave words. He blamed the whole thing on the reporter who first raised the seal hunt issue and accused the media of misquoting him.

Cleary even felt up the touchstone - pledged his eternal, unquestioned and undying support for seal bashing - just so there could be no further about as to his true feelings.

But what are those true feelings?

Good question:

I will not shy away from any issue as a federal MP. I will continue to embrace all sides of every argument in the interest of healthy and reasoned decision making. There may be room to negotiate a better deal for our fish products generally.

Let me re-iterate, I am not proposing to ban the commercial seal hunt in any way.

If we don't do things differently, we will end up with the same result every time. We can't be afraid of the conversation.

Embrace all sides?

Yes friends, as he ran from the conversation, as he abandoned the debate, Cleary proudly clopped his cocoanuts that much harder and stuffed some extra straw in his belt to show how much of a maverick he really is.

An internal Kruger memo leaked to news media suggest that the papermaker is planning to lay off upwards of 135 workers at the company’s operation in Corner Brook.

The memo notes that comparable plants in North America function with 250 employees compared to the 385 current on the books at Corner Brook. The memo also indicates the Corner Brook mill produces paper at $140 per ton compared to $100 per ton elsewhere.

Ryan Cleary's news release about the seal hunt, arising from his comments to the Fisheries Broadcast:

I will not back down from any issue: Cleary

St. John's – NDP MP Ryan Cleary (St. John's South-Mount Pearl) released the following statement to clarify misleading comments in the media concerning his position on the Newfoundland and Labrador commercial seal hunt.

"On Sunday I was asked in an e-mail by John Furlong, host of the CBC's Fisheries Broadcast, to clarify the NDP position on the seal hunt. He asked whether the NDP is changing its position on the hunt or proposing there be a buyout of licences, 'Someone is telling me that the NDP might also (along with yours truly!) be sensing that the writing may be on the wall,' Furlong wrote.

Furlong interviewed me and I made it clear that the NDP stand has not changed. The party and I are in full support of the commercial seal hunt – period. I then reacted to Furlong's column (Death on the ice: Time to pull the plug on the seal hunt? John Furlongwww.CBC.ca/nl January 21, 2012) Furlong begins his article with the statement, 'There's no question in my mind that the commercial seal hunt is probably on the way out. So does anyone care?'

The answer is yes. Of course everyone in Newfoundland and Labrador cares.

We cannot hide behind the debate and pretend that the market for seals is not in trouble. Markets for seal products are closed in the United States, the European Union, and Russia. It is also unclear what is happening in the Chinese market. Facing this reality head on is the only way to address this situation.

The debate about the future viability of the industry is a worthy one and it needs to happen. It can only be a good thing as we chart a future course for our overall fishery.

Having this debate does not signify in any way an end to the hunt – we simply need to start talking. For too long, simply raising the seal hunt issue has been taboo. It shouldn't be.

I will not shy away from any issue as a federal MP. I will continue to embrace all sides of every argument in the interest of healthy and reasoned decision making. There may be room to negotiate a better deal for our fish products generally.

Let me re-iterate, I am not proposing to ban the commercial seal hunt in any way.

If we don't do things differently, we will end up with the same result every time. We can't be afraid of the conversation."

Peckford-era finance minister Dr. John Collins has another letter to the editor in the Telegram questioning Muskrat Falls.

The continued problem with Nalcor’s (and government’s) decision to date respecting the project’s rationale and validity thus remains painfully obvious.

The basis question is not whether Nalcor is wrong in postulating Muskrat’s power to be more cheaply accessible than alternative combined sources on-island.

The real question is whether or not they are right in forcing that opinion on the public, absent cogent, unbiased information on related issues troubling knowledgeable observers, expressed time and again.

One of the issues Wade Locke set out to address was the impact Muskrat Falls would have on public debt. For some other information on Muskrat Falls and public debt, check this earlier post.

Slide 43 is a table of debt servicing amounts based on the amount borrowed and the rate of interest amortized over a 30 year time. For example, $3.0 billion at 5% would cost $195 million in annual payments to pay the principle and interest. on the opposite end of Locke’s scale, $8.0 billion at 10% would cost $849 million each year.

Earlier in his presentation, Locke asserted that the provincial government can currently borrow money at 5% while Nalcor can borrow money at 7.5%.

The money to meet those payments would come from only one source: electricity rates. As noted right at the beginning of the presentation, the entire project is proposed based on having the ratepayers of Newfoundland and Labrador carry 100% of the cost.

This money would be in addition to other Nalcor costs for producing electricity in the province. The public utilities board is responsible for setting electricity rates in the province. The board must allow Nalcor to recover its costs plus provide a rate of return – essentially a profit – on its operations. The board will also add an amount for Newfoundland Power, the electricity distributor on the island to determine the rate paid by residential and industrial consumers.

One of the important pieces of information needed to determine the impact on the public debt and rates would be the amount of money, if any, that Nalcor would raise or how it would raise the money. Equity investors, borrowing or subsidy from the provincial government all carry different implications for public debt.

There are different possibilities. Locke did not discuss them. Instead he relied on other information as he presented on Slide 44. Locke did not indicate in the slides or his presentation where he got the information.

According to Locke (Slide 44), Nalcor would generate $550 million from its proposed rate (7.5 cents per kilowatt hour). This would allow Nalcor to cover a loan of $8 billion at 5% with $100 million left for “other expenditures”., according to Locke.

He also claims that revenue from “residual power” would generate up to $60 million. This “residual power” is the power other than that designated for use in Newfoundland and Labrador or the portion shipped free to Nova Scotia.

As a result, Locke concludes, the extra debt won’t be a problem for the provincial government or Nalcor. Locke has not explained how he reaches this conclusion other than by the circular logic that since Nalcor has provided enough theoretical money in its estimates to cover the payments, the payments will be covered and therefore there is no problem.

Since Locke does not explore other possible financing options, he has no basis to offer any assessment of how those financing options might affect public debt and public spending.

For example, the provincial government might opt to give borrow money at its lower rate of interest and give it to Nalcor as a gift. That may not be the current plan but it is one way of handling unanticipated massive cost over-runs. That would affect the amount Nalcor could charge in rates and it also changes the amount taxpayers would have to divert from other expenditures to service the larger, direct public.

There are other curious points in Locke’s slides. He does not explain why the residual power would net slightly more than 10% of the revenue generated within Newfoundland and Labrador for the same amount of electricity.

Most significantly, though, Locke does not explain where this power would be sold. There are no current sales for it, nor are there any likely sales given the state of markets in nearby states or provinces. in other words, Locke is just speculating and his amounts for “residual power” are fictitious.

Financing such a large project has significant implications for public finance in the province. Locke disposes of the issue in two slides. They appear to be based on a series of unsubstantiated assumptions or claims such as Locke’s assertion that Nalcor’s proposed rates would definitely give money “left over to retire other provincial debt, to fund other public services or to reduce taxes.”

At best, those are policy decisions not taken, yet Locke pushes them out there as if they were real benefits. The assumed benefits are based on other apparently untested assumptions, including the one that Nalcor’s calculations are right.

Assuming the can opener

Locke’s last series of slides (45 and 46) cap off a series of unsubstantiated claims with a flourish of more.

For example, on Slide 45, Locke claims that a connection to the ‘North American grid” would allow other energy developments including onshore wind potential on the island and Labrador or “stranded” natural gas.

The province is already connected to the North American grid from Labrador. We do not need Muskrat Falls to facilitate the development of wind energy in Labrador.

An interconnection to Nova Scotia would allow Nalcor and others to develop wind potential on the island. We don’t need Muskrat falls to do that.

As for exports, Locke failed to examine any potential export markets. There are none, especially for very expensive power at Muskrat Falls that grows even more expensive when transported the long distances from Labrador or the island to market.

Locke does not seem to recognise the logical problem in his claim about gas. If gas is too expensive to produce electricity to beat Muskrat Falls electricity, then it is highly unlikely that natural gas could make electricity in Newfoundland and Labrador that could be cost competitive in markets where even Muskrat Falls is too expensive to penetrate successfully.

Recall that, as Jim Feehan noted, US producers are making electricity from natural gas next to the market that costs no more than four cents per kilowatt hour to produce and very little to transport. If Muskrat Falls electricity will cost at least 14.3 cents per kilowatt hour in St. John’s, imagine what it would cost to shop the same electricity to Ontario? No wonder Nalcor can’t sell the power outside the province and could only give it away free to Nova Scotia.

Locke’s Conclusion

Locke’s conclusion essentially repeats the untested assumptions/assertions of his presentation.

He does add a new one:

Without the extra energy made available by Muskrat Falls, there is serious questions whether or not the mining projects expected in Labrador within the next 10 years can proceed. Currently, we do not have sufficient recall power. If all these projects proceed as expected, we may need another 400 to 500 MW of power. This may require the development of additional resources on the island (hydro, wind, etc.)

His claim that “we do not have sufficient recall power” is simply not true. In the same way that Locke ignored surplus electricity on the island , he also ignores the 5800 megawatts of electricity available in Labrador for future development.

Churchill Falls electricity is available under the right circumstances, including a use of the Electrical Power Control Act’s provisions on electricity control and availability within the province.

The rest is just grasping. Labrador also offers other hydro-electric and wind resources that could meet an industrial need. What’s more, Muskrat Falls could supply a Labrador contingency on its own without an interconnection to the island. After all, if the island and Nova Scotia would need 60% of Muskrat Falls electricity, the remainder would be insufficient to meet an industrial development of the size Locke suggests. It would be far cheaper and easier to meet Labrador needs with Labrador power rather than develop “additional resources on the island” that Locke and Nalcor have already insisted either don’t exist or are too expensive to develop.

24 January 2012

The firearms instructor who shot himself in the foot – literally – during a weapons handling course just lost the latest round in court trying to get some compensation for the consequences of having the video of his unfortunate incident posted to the Internet.

Follow the links on that one to get every twist and turn of the lengthy story. It started in 2004.

To be fair to Ryan Cleary, this is not the first time he has suggested we need to stop smashing seals over the head and selling off bits and pieces of them.

Sure Cleary’s the guy who has never met a nationalist myth he wouldn’t monger or touchstone he wouldn’t grope, but he has been known to take a different view of the seal hunt.

A quick google search Tuesday night turned up a column of his from April 2008 from the old Spindy. Someone posted it to an IFAW website.

Try not to giggle at the idea of Ryan Cleary using the word reality.

“REALITY CHECK: Time to Face the Fact the Newfoundland Seal Hunt is Doomed.”

The Independent, Newfoundland and Labrador Newspaper

By Columnist RYAN CLEARY Saturday, April 19, 2008

Time to face the fact the Newfoundland seal hunt is doomed. We cannot save it, not right now, no matter how right and desperate we are to try.

The forces against the commercial hunt - dark though so many of them may be - have become too passionate and powerful. The animal rights crowd is winning the public relations war with the average Joe and Jane on the world street. The continued battle is doing more harm than good to our economy and international image.

We would be better off if the commercial hunters retreated -at least for now, until a world appetite develops such that the method of harvest is secondary to the mouths that are fed and bodies clothed.

It hasn't been that way in a dog's age. The Newfoundland hunt was once about survival, plain and simple. Every part of the animal was used to keep outport body and soul together. More and more it's about pelts and prices.

That's not enough to justify a hunt. The seal has become the modern-day buffalo in terms of waste.

Given that so many of the world's cupboards appear to be bare or headed there, a new hunger for seal (and our fish, but that's not this week's topic) may not be that far off. It was only last week the Globe carried a two-page feature on the rising prices of food around the planet and a crisis around the corner.

The world will eat seal when it's hungry enough to eat seal. It wasn't long ago lobster was the spider of the sea.

As for the politicians defending the hunt - federal Fisheries Minister Loyola Hearn chief among them - he's been criticized in the national media for using the hunt to improve the Conservative lot in the Atlantic provinces.

It sure looks that way. At the very least, Hearn was stunned enough to play directly into Paul Watson's hands. Hearn, the poor over-his-head shagger, can't win. More on that in a moment.

On Thursday of this week The Globe and Mail ran eight letters to the editor under the headline, The many truths about sealing.

A sample of the anti-hunt sentiments:

"I will not vacation in Canada and will avoid buying Canadian products until the seal slaughter stops," writes Pat Ginsbach of Kerrville, Tex.

Anita Rutz of New York mentions the recent loss of four sealers from Quebec. "If they weren't committing acts against God's creatures, they would be alive."

Peter Bowker of Ontario says if government could find $50 million to pay pig farmers not to raise pigs, why can't the same amount be found to pay sealers not to seal? "Or must we admit that the hunt, as it is conducted, is really a cultural ritual, like cockfighting and fox hunting?"

Many Canadians who can sympathise with the economic necessity of the seal hunt can't get past the term "skinned alive," writes Birgit Van De Wetering of Ontario. "It belies the image of warmth and folksiness the Newfoundland Tourist Board is trying to sell us."

Right or wrong, an anti-seal hunt attitude has taken hold. That's the reality.

We are right to defend sealing as part of our heritage. An attack on the hunt is an attack on who we are as a people and where we come from. Remove the emotion from the debate, however, and it's clear the commercial hunt is no longer critical to our survival.

Today's hunt is as much about pride - our God-given right to hunt - as money. That attitude got us nowhere with fish. It's getting us nowhere with seals.

I would argue the hunt has marginal value. The potential loss to tourism alone may far outweigh the benefits of a continued hunt. God knows the hunt has political power.

The Globe went after Hearn earlier this week in an editorial critical of the Canadian Coast Guard's recent boarding and seizure of the environmental vessel Farley Mowat and the arrest of her captain and first officer. The paper described the move as a "grossly disproportionate response" to the efforts of opponents to document the seal hunt.

For his part, Paul Watson, head of the Sea Shepherd Conservation Society, said the action was taken to seize graphic videotapes of the hunt. The Globe, on the other hand, noted the action was a way for Hearn and his party to redeem themselves with East Coasters. God knows they need redeeming.

Premier Danny Williams waded into the debate with a guest column of his own in the Globe. He proposes the banning of hakapiks. But such a move will not appease anyone as long as the ice beneath the seal is stained red with blood.

Ironically, ending the commercial seal hunt may spell an end to Watson, who relies on it financially as much as any sealer from Twillingate.

The Globe also carried letters in defence of the hunt. Kyle McIver of Kingston says he finds no difference between clubbing seals with hakapiks, fish asphyxiating on decks or using high-pressure metal bolts to sever spinal cords of cattle. "If sealing is basically akin to agricultural meat production and fishing, then the primary reason to defend seals is reduced to the fact they are cute with big round eyes and soft fur, and the argument fails."

The argument may fail, but the big round eyes will always win. Until the people are hungry enough.

Comparative political and legal scholars have observed what they consider to be an important constitutional innovation: the emergence of an alternative model of a bill of rights, which has been adopted in several Westminster-based parliamentary systems.

The form these bills of rights take differs significantly from more conventional models, because they do not compel legislatures to comply with judicial interpretations of rights.

These constitutional innovations raise the following two questions:

How does this new model conceive of the function of a bill of rights?

Given the conceptual contribution of Canada’s notwithstanding clause to this new model, should Canadians revisit the deep scepticism in which they regard this political power to set aside the effects of a Charter ruling?

Hiebert has served as a member of the Ontario Electoral Boundaries Commission, an independent, non-partisan body with responsibility to readjust the electoral boundaries in the province of Ontario
.
Her current research project examines how the recent adoption of bill of rights in several parliamentary jurisdictions affects political practices, policy development and legislative behaviour (Canada, NZ, UK, Australia).

For more information contact Dr. Matthew Kerby, 864-3093 or kerbym@mun.ca

For those following the story on the helicopter used for medical evacuation in the province, here is the one people are talking about.

It’s the Long Ranger version of the Bell 206. The one in the video below is operated by a medical centre in the United States. You’ll find 206 L-4’s and later versions like the Bell 407 in use across North America.

Note the size of the cabin.

Can’t store oxygen except on top of the patient? Can’t move around enough to perform cardio-pulmonary resuscitation or intubation without landing the aircraft? That doesn’t sound right if the aircraft is properly configured.

Bear in mind that the 206 L-4 is a light helicopter. Others in the same class – Eurocopter EC-135 or EC-145 – offer comparable space. Sure that patient’s feet are forward in the space that would be occupied by a co-pilot in another configuration but the main cabin area seems to have quite a bit of room. Again, that’s if the aircraft is properly configured.

Just to give you another perspective, here’s a video of a medical evacuation for a traffic accident victim using a Bell 407. That’s essentially the 206 L-4 with a different engine and some other minor changes.

Skip through to about the 3:45 point in the video when someone opens the access door. You can now see the patient in position and get a good idea of the space in the main part of the cabin.

So far the information in the public domain is pretty skimpy. You can’t tell if this is a real issue or just part of the pre-budget circus of demands and requests.

The union representing the aero-medical staff hasn’t really described the problem very effectively. Maybe the problem is the way the aircraft is fitted out, as opposed to the complete failure of the type. After all, 206s have been in use as air ambulances for decades in this province.

The union also hasn’t proposed what type of aircraft they think would meet the need if the Long Ranger can’t do it. If the 206/407 can’t cut it, how big a helicopter do they need?

According to the CBC online story the union is saying that “consideration should be given to a helicopter similar to those used in search and rescue and offshore.”

That would certainly solve the space problem, but the overall capability of the helicopter (EH-101 or S-92) is way beyond what you typically see in the air ambulance role. The operating cost would be huge in comparison to the 206/407 type. Outside of Cougar Helicopters, no company in the province operates S-92s and the EH-101 is only used by the Royal Canadian Air Force search and rescue squadrons.

Odd given the close relationship between the baymen and the bluenosers on energy issues these days. They should be on the same wave length right down to the fact that Kathy Dunderdale’s comms director is now issuing releases for the Nova Scotia energy department.

Maybe it’s nothing.

Then again, we are only a week away from the second deadline for Emera and Nalcor to finish their agreement on Muskrat Falls. Maybe the the Nova Scotians don’t want to draw attention to Muskrat Falls if they have a sense that the deadline may get shifted back again.

In Slide 20, Locke turns a comparison of the cost elements of Muskrat Falls and Nalcor’s isolated island scenario into a chart. Locke notes in red at the bottom of the slide that the only difference between the two scenarios is fuel prices.

In Slides 21 through 26, Locke looks at the pricing assumptions Nalcor used for crude oil and finds them in line with other assessments. In Slides 26, 27 and 28 Locke transitions to a discussion of current prices for natural gas.

Gas

In general, Locke spent the greatest amount of his presentation on natural gas. He did not, at any point, offer an assessment of possible alternatives to Muskrat Falls. The sections on gas – imported, local and shale – contain omissions and errors that seriously affect the usefulness of Locke’s comments and the validity of his claims and conclusions.

Instead, Locke’s presentation appeared to refute or attack potential threats to the project he previously endorsed. His language in describing shale gas very much suggests an adversarial as opposed to analytical approach in his treatment of these potential alternatives.

Imported Natural Gas

Starting at Slide 26 and continuing through to Slide 37, Locke looks at imported natural gas prices in great detail. He looks at possible future price scenarios based on anticipated demand growth.

While Locke spent a huge amount of time on this issue, his analysis starts from an unfounded premise. That is, he starts with the assumption that the construction costs for a natural gas plant are the same as for any other thermal generation (the Nalcor Holyrood scenario).

You will find this starting point in the comments on Slide 20:

While the isolated Island is $2.2 billion (PV 8%) more expensive, the difference is driven by fuel costs.

Maybe there is an alternative fuel, like natural gas, that can eliminate this differential. Let’s look at this more carefully.

One would expect that an experienced economist like Locke would construct a straight forward comparison along the lines of the Slide 19. That one had all the costs of the isolated scenario on one side and Muskrat Falls on the other.

Locke could have used existing information for some of it. Bruneau’s 2005 study proposed a configuration and gave a preliminary cost estimate. Locke claims to have reviewed it but for some unknown reason he simply ignored it as a basis for comparison.

D’oh! - Ignoring the Obvious

Unfortunately for Locke – and his audience – he didn’t do that really obvious comparison. All Locke had to do was calculate a few values, like the capital cost, the total natural gas fuel cost for the same time period as in the other comparisons and there’s the whole thing.

But that isn’t what Locke did. He never discussed the capital expenditures. Nor did he ever equate the total cost of fuel a natural gas plant would need to deliver the electricity needed across the entire period used in the other comparisons.

Instead, Locke just launched into a lengthy discussion of the unit price of natural gas and the potential factors that may drive natural gas prices up to the point where natural gas can’t beat the project he has already endorsed. Of course, without knowing the total amount of fuel needed or the relationship between units of natural gas compared to oil, Locke’s discussion is irrelevant.

And, of course, since his cost of Muskrat Falls electricity in the earlier slides (7.5 cents per KWH) omitted transportation costs, you wouldn’t necessarily have had a fair comparison across the board anyway.

Unexplored Alternatives

Unfortunately for the audience at Locke’s presentation, Locke’s colleague Jim Feehan didn’t get the time during the Question and Answer session to delve into some related issues that Locke skipped over. For example, Feehan noted that natural gas electricity is currently available in the United States for two to four cents per kilowatt hour.

If Nalcor could import that electricity through Nova Scotia for 10 cents per kilowatt hour, you would have a source of electricity in the long-term that would be competitive to Muskrat falls without the risk to the taxpayers locally. Feehan just didn’t have the time to get into that discussion.

Locke did note the low cost of natural gas in the US at the moment.

Offshore Gas

One slide.

That’s it.

The slide amounts to a series of excuses for ignoring natural gas.

Locke’s first two bullets contain the same arguments Nalcor used to justify the fact it did not study natural gas as an alternative to Muskrat. They aren’t any more convincing when Locke repeats them than they were when Nalcor pushed them out.

The SRBP favourite bullshit line:: “…there are no public plans to develop Grand Bank gas for use at Holyrood…”. Of course there aren’t. Nalcor is already committed to Muskrat. They aren’t going to study potentially cheaper alternatives when they have made their choice.

That doesn’t mean they got it right, though. One would have thought Locke would review this in greater detail in a presentation that purported to compare Muskrat to the alternatives. Instead, Locke just uses crap logic to justify his own analytical failing: essentially, his argument is that he didn’t study local natural gas because Nalcor isn’t going to build it because they want to build Muskrat Falls.

One bullet point was pure bullshit:

None of the currently available studies on natural gas can be used to definitely say that domestic natural gas is viable to use as a fuel source for producing electricity at Holyrood. …

No one said it was. They are starting points. Locke should have – at the very least – made an assessment of them, but as we know he just didn’t bother. This is the sort of thing one would expect from an advocate for Muskrat falls, not an analyst.

One bullet point is wrong, as it turns out:

There is not even a natural gas royalty in place at this time.

Your humble e-scribbler thought so as well. According to the natural resources department website, though, the province has a natural gas regime. The pdf file dates from April 2010. While the website claims there is a regime, it hasn’t be set down in regulations like the generic oil royalty regime.

Shale Gas

Locke spends three slides discussing shale gas. Rather than view it as a potential alternative, Locke considers it a threat to Muskrat Falls (Slide 40):

Maybe economic to produce at $4-6/MCF, and would constrain NL’s options

…

In the short term, lower natural gas prices, which will compete with hydroelectric imports and reduce the revenue potential from exported hydro electric projects such as Muskrat Falls and Gull Island. In fact, this will have implications for our ability to develop Gull for the export market (at least in the near term).

That’s a huge indication of the fundamental pro-Muskrat bias Locke brought to his presentation.

At no point did Locke assess Nalcor’s interest in shale gas on the west coast of Newfoundland or the potential availability of shale gas in the St. Lawrence basin as a source of feedstock or electricity. If Nalcor or a local private sector explorer finds shale gas in the province, we could have a ready supply of cheap, easily accessible fuel for a gas plant that is available in less than 10 years.